Medicare, Medicaid Would be Cut $196 Billion Over 5 Years Under Bush Budget Plan

WASHINGTON – President Bush took his proposals to slow Medicare and Medicaid spending to a new scale in his proposed 2009 budget even though previous, more modest efforts to trim the entitlement programs went nowhere.

Over the next five years, the president would reduce by $196 billion the two entitlement programs that provide most of the medical care for the nation's elderly and poor. He would achieve most of the savings in the budget blueprint he submitted Monday by freezing the rates Medicare pays for hospital, nursing home and hospice services for the next three years.

The two health programs would continue to grow — just not as quickly.

"The Medicare portion of the budget should be viewed as a stark warning," said Health and Human Services Secretary Mike Leavitt. "Medicare, on its current course, is 11 years from going broke."

Leavitt said hard choices are needed to ensure Medicare will continue for future generations. But some lawmakers and health care providers quickly dismissed the proposals.

"This administration ought to know that five years' worth of Medicare and Medicaid cuts totaling $200 billion are dead on arrival with me and with most of the Congress," said Sen. Max Baucus, the Democratic chairman of the Senate Finance Committee.

Bruce Yarwood, president and CEO of the American Health Care Association, called the 2009 blueprint "the most unreasonable and unrealistic of President Bush's entire tenure in the White House."

Bush would slow the annual growth of Medicare spending to 5 percent instead of the 7 percent current trajectory. Spending growth would slow from 7.3 percent to 7 percent for Medicaid, which provides health coverage to about 50 million poor people.

Higher costs for the two entitlement programs are occurring because of the growing numbers of retirees, a demand for more services as they age and skyrocketing medical costs.

All those factors are the major reason for the 2.3 percent proposed increase in the Health and Human Services Department's budget for next year — to $733.3 billion. That higher figure, however, masks proposed freezes or cuts for many agencies within the department. Under the president's recommended budget, money for:

— The National Institutes of Health, the primary agency for overseeing medical research, would remain at $29.4 billion next year.

— Running children and family services support programs for the poor, such as Head Start and the Low Income Home Energy Assistance Program, would drop from $47.3 billion to $45.5 billion.

— Improving access to health care among the poor and the rural, would fall from from $6.9 billion to $6.0 billion.

— The Centers for Disease Control and Prevention would drop from $6.2 billion to $5.8 billion.

The Food and Drug Administration fared better under the president's budget. The agency's budget would increase by $130 million to $2.4 billion, in part to pay for more employees to monitor the safety of imported food and medicines.

Bush also recommended increasing from $5 billion to $9 billion the average annual spending on the popular State Children's Health Insurance Program. Bush twice vetoed bills by Congress last year to increase it to $12 billion.

The administration said it also wants to limit coverage under that program to children from families who earn less than two and half times the porverty rate. For a family of three, that would limit eligibility to those with less than $44,000 annual income.

Several states provide subsidized health coverage to families above that level now. Children currently in the program would be allowed to maintain their coverage.